Does a Conventional Loan Always Require an Appraisal on a Purchase?

The Quick Read: No. Most conventional purchase loans get an appraisal, but Fannie Mae and Freddie Mac let a lender skip it when their automated systems offer that option. You can’t request it, and neither can your loan officer. The system decides after the lender submits your file. Plan for an appraisal and treat a waiver as a bonus.

Why Do Lenders Order an Appraisal in the First Place?

An appraisal is an independent opinion of what the home is worth. The lender uses it to confirm the house is solid collateral for the loan. You use it, whether you think of it that way or not, as a check against overpaying.

The appraiser studies recent comparable sales, the home’s size and condition, and the neighborhood. The result is a value. If it matches or beats your contract price, the loan moves ahead as planned. If it comes in lower, the math of your loan changes. More on that below.

An appraiser is not a home inspector. The appraiser answers “what is it worth?” An inspector answers “what is wrong with it?” Different jobs, different reports.

This is also where the word “always” in the title comes from. For decades, an appraisal was the default on a conventional purchase. That default has loosened.

How Can a Conventional Purchase Skip the Appraisal?

Through an offer from the automated underwriting system. Fannie Mae’s version is called value acceptance. Freddie Mac’s is called ACE, short for Automated Collateral Evaluation.

Here is how it works. The lender runs your loan through Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Product Advisor before ordering an appraisal. On a purchase, the value entered is the price on your sales contract. The system compares the property against its database of past appraisals and other data. Then it either offers to accept that value or it doesn’t.

Per the Fannie Mae Selling Guide, when Desktop Underwriter makes the offer, an appraisal is not required. When it doesn’t, an appraisal is. The same sequence for ACE: submit first, enter the purchase price as the value, then check the feedback certificate for eligibility.

A few details matter:

• The system usually needs to find a prior appraisal on the same property.
• The lender can exercise the offer only if no appraisal has already been ordered.
• Under Fannie Mae’s rules, the offer can’t be more than four months old on the note date.
• If the file changes or the offer lapses, a full appraisal comes back into play.

Fannie Mae has moved away from the phrase “appraisal waiver.” The Appraisal Institute objected to the new wording, arguing that “value acceptance” hides the fact that no appraisal happened. You will hear both terms.

Can You Ask for a Waiver?

No. This is the single most common misunderstanding.

The decision belongs to the automated system, and the lender still has to choose to use the offer. Think of it like a green light at an intersection. You can’t press a button to turn it green. You can only show up with a file the system likes.

Lenders also can step back from an offer. Fannie Mae’s job aid on no-appraisal loans says a lender must order an appraisal when it knows of something that makes the property ineligible. It also points to a few situations where the offer can’t be used:

• Texas homestead cash-out loans.
• Loans where the law requires an appraisal.
• Loans that use rent from the subject property to qualify.
• Files where an appraisal was already obtained.

That rental-income point matters to some buyers. Say you plan to buy a two-unit home, live in one side, and count the other unit’s rent toward qualifying. That file points toward a full appraisal.

What Are the Valuation Options?

A conventional purchase doesn’t have just two outcomes. Think of a ladder. The system picks the rung, and the deal works down the ladder if the top rungs aren’t offered.

The second rung is worth knowing. Fannie Mae offers value acceptance with property data, and Freddie Mac has an equivalent called ACE+ PDR. A trained collector visits, takes photos, and records condition details and a floor plan. No appraiser is needed. The Scotsman Guide covered this option when it was added.

If no offer comes, the lender follows the appraisal rules for the file. Whether a desktop or hybrid appraisal is allowed depends on the automated finding. A full in-person appraisal is the fallback that always exists.

Which Files Point Toward an Appraisal, and Which Toward a Waiver?

Nobody can promise a waiver on a given file. The system looks at the loan, the property and the data around it. Some patterns help you set expectations.

Leverage plays a role too. Fannie Mae says it expanded value acceptance on purchases in early 2025, and trade press reports it now reaches higher loan-to-value ratios than before. Still, the exact limits are the agency’s to set and change, so ask your loan officer what applies to your file.

Two other points. First, a waiver is for conventional loans only. FHA and VA loans follow their own appraisal rules. Second, interest in a waiver shouldn’t shape how you pick a loan program. Your credit, down payment and property decide the program. The valuation path comes after.

Walking Through a Purchase

Picture a buyer with a signed contract on a one-unit home they will live in. They are putting 5% down, which fits the standard purchase leverage of 95% loan-to-value on a principal residence. Mortgage insurance applies because they’re above 80% LTV. These figures are modeled assumptions, and every program figure is subject to lender guidelines and full file review.

The loan officer submits the file to the automated system with the contract price as the value. Two things can happen.

Path one: an offer comes back. The lender uses it, and no appraisal is ordered. The buyer skips the appraisal fee. The buyer also skips the independent value check, so the inspection becomes the only professional look at the house.

Path two: no offer. The lender orders an appraisal in the ordinary way. The buyer pays for it, and the report comes back with a value. Matching the price is the clean outcome. Coming in under the price is the problem.

Neither outcome is visible when you write your offer. That is why the sensible plan is to budget for an appraisal and be pleasantly surprised if it vanishes.

What If the Appraisal Comes In Low?

A low appraisal means the home appraised for less than your contract price. The lender bases the loan on the lower of the price and the value. So the gap lands on you unless you change something.

You have four main moves:

1. Renegotiate. Ask the seller to lower the price toward the appraised value. Sellers often do this when the next buyer faces the same appraisal.

2. Bring more cash. Cover the gap from your own funds. That also changes your down payment percentage, which can change your mortgage insurance picture. Insurance applies above 80% LTV. It can be cancelled on request at 80% of the original value, subject to payment history and other conditions, and is ended automatically at 78%.

3. Dispute the value. Your lender can ask for a review if the report missed comparable sales or contains errors. This works only when you have real evidence.

4. Walk away. If your contract has an appraisal contingency, you can usually exit and keep your deposit. Read the contract terms before you rely on this.

A waiver removes this risk, but only because no one checks the price. That is a trade, not a gift.

Does a Waiver Mean You Can Skip the Home Inspection?

No. Get the inspection either way.

An appraisal was never a condition check in the first place. It values the home. A waiver removes even that. Fannie Mae’s relief for the lender covers value, marketability and condition, which protects the lender. It doesn’t mean anyone looked at your roof, your furnace or your foundation.

You can question how much a waiver matters to the lender and still agree with the practical point. Without an appraiser, you are the only one verifying the price and the condition before closing.

Freddie Mac’s own research note found that ACE loans had lower default rates in its sample. That result is specific to how ACE picks eligible loans. It says the selected loans performed well for the lender. It says nothing about your house.

What Does the Appraiser Check When There Is One?

The appraiser looks at safety, soundness and structure. Conventional property standards are not lax, but they are not picky about style either. Worn carpet and dated paint are cosmetic. A failing roof, active leaks, missing handrails or signs of structural trouble are not.

If the report flags a serious problem, the lender may require repairs or a specialist inspection before closing. Sellers often handle these, and some can be negotiated into the contract. Government-backed loans carry their own condition standards, which tend to be stricter on certain items, so a home that works for one program may stall on another.

Do You Still Get a Copy of the Valuation?

Yes. Under the federal ECOA Valuations Rule, lenders must give you free copies of appraisals and other written valuations on first-lien home loans. The CFPB’s transaction coverage factsheet says lenders must also notify you of that right, with timing that is set by the rule and can vary by file and lender. You can waive the timing of delivery, but not your right to the copy.

How Should You Plan and Budget?

Keep it simple.

• Assume an appraisal and keep the cost in your cash plan.
• If a waiver arrives, treat the saved fee as a cushion for inspection items or moving costs.
• Make your offer based on what the home is worth to you, not on whether the lender will check.
• Keep your inspection contingency and, where possible, an appraisal contingency in the contract.
• Tell your loan officer early if the home is unusual, has an in-law unit, or if you plan to use rent from part of it.

Your choice of program comes first. Lendmire’s conventional loan programs start from the borrower’s file: credit, down payment and property type. For reference, the wholesale conventional programs this brokerage works with start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Those are guidelines, not promises.

Key Terms Defined

Value acceptance: Fannie Mae’s offer to accept the lender’s stated value without an appraisal, issued by its automated system on eligible files.

ACE (Automated Collateral Evaluation): Freddie Mac’s equivalent, run in Loan Product Advisor, which lets a lender deliver a loan without an appraisal report.

Desktop Underwriter: Fannie Mae’s automated system that reviews a loan file and returns a finding.

Hybrid appraisal: An appraisal where someone other than the appraiser collects the property data, and the appraiser completes the valuation from it.

Appraisal contingency: A contract clause that lets you renegotiate or exit if the home appraises below the price.

Loan-to-value (LTV): The loan amount as a percentage of the home’s value or price, whichever is lower.

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Nothing here is a commitment to lend, and all figures are subject to lender guidelines and full file review.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae Selling Guide B4-1.4-10 Value Acceptance

2. Freddie Mac ACE: Automated Collateral Evaluation

3. Appraisal Institute commentary via Working RE

4. Fannie Mae No Appraisal Required job aid

5. Scotsman Guide

6. Freddie Mac (capitalmarkets.freddiemac.com)

7. CFPB ECOA Valuations transaction coverage factsheet